Undergraduate Nav

Undergraduate Program

1. F335

   Security Trading and Market Making

   • 16-weeks
   • 3 credits
   • Prerequisite: F370 or F304 with a grade of C or better

   Theory and practice of securities trading at exchanges around the world; how trading and the design of markets affect liquidity, informativeness, transparency, volatility, and fairness. Analyzes alternative trading strategies and the cost of trading. Examines innovations in security exchanges and regulatory policy, and provides hands-on trading experience using realistic trading simulations.

   Learning Objectives:   
   I. OVERVIEW      
       A. Introduction      
       B. The Trading Industry
   II. HOW TRADING IS DONE      
       A. Orders      
       B. Market Structure Around The World      
       C. Limit Order Book vs. Call Markets
   III. SECURITY TRADER'S VIEWPOINT      
       A. The U.S. Over Time      
       B. Transaction Cost Measurement      
       C. Paris, Tokyo, and London      
       D. Recent Developments      
       E. Institutional Traders
       F. Trader Simulation Competition      
       G. Trader Simulation Presentations     
       H. Day Traders
   III: MARKET MAKER'S VIEWPOINT      
       A. Inventory Management      
       B. Market Manipulation and Insider Trading
       C. Underwriters As Market Makers      
       D. Specialists          
       E. Brokers and Informed Traders      
       F. Arbitrageurs
   IV. REGULATOR'S VIEWPOINT      
       A. Transparency in Corporate Bonds      
       B. Dealer Simulation Competition      
       C. Dealer Simulation Presentations
       D. Crashes     
       E. Market Quality Disclosure Rules      
   IV. COMPETITIVE EXCHANGE VIEWPOINT      
       A. Competition in Options      
       B. Trading Innovations  

   Typical Text: Trading and Exchanges - Larry Harris